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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

185) ll-F-12 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:51:00 AM Sheet 185 of 276 
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

Office of Air Quality Planning and Standards 

Research Triangle Park, North Carolina 27711 

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MEMORANDUM 

TO: Docket 

FROM: Chebryll Edwards (U^jb^ujLi &LAJO^A*AJ~^ 

DATE: June 4, 1991 

SUBJECT: DOJ Comments on WEPCO Legislative Rule Draft 

II-F-12 

The revisions marked in this draft legislative rule reflect 

Department of Justice comments give to EPA in a meeting on May 30, 

1991. 

,.„\Z199» U ^ 
I 

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5/30/91 

[ revised pp. 15-18 ] & 

2. The WEPCo and Puerto RicaiyCement Decisions 

As noted above, to calculate whether a physical or 

operational change "increases" emissions, EPA regulations -eall 

•«u.if^ \-^*gj»*e- a cempnii«_«__i_ hntunnn wnnt nn».j/n. -nii.nninnB tr ^"^"-f i finflinl 

*.*> jy*. 

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.UJVJ 

iP-fr &*jLtfr\ ^°'ioo,*^*»v>^40 CFR 52.21(b) (3) (i)(. If y ..uwevui y fehe emissions 

•^•'jNunit has not "begun normal operations," EPA regulations recognize 

""•* 'that future actual emissions are difficult to predict and so 

employ future "potential" emissions as a proxy. 40 CFR 

52.21(b)(21)(iv). The linchpin under the current regulations for 

predicting future emissions after a modification - whether to — 

-ff 1 ? ***** ••*•"•»•»-«-"-•""'-"?1 p r th e a_H-ii:*-1-frn-pr._-_-r>-*-.a*l t-nrf^—^ i s 

thus whether the unit has "begun normal operations." 

Two recent federal appellate court decisions have 

addressed EPA's interpretation of the phrase "begun normal 

operations." These decisions, Puerto Rican Cement Co.. Inc. v. 

US EPA. 889 F.2d 292 (1st Cir. 1989) and Wisconsin Elec. Power 

Co. v. Reilly. 893 F.2d 901 (7th Cir. 1990) ("WEPCo"). occasion a 

reexamination of EPA's interpretation of the phrase, and of the 

usefulness of the regulatory language itself. The meaning of the . 

phrase is highly fact-dependent, and hac proved anbigueua and r^J^^ik 

troublesome in- application; thus, as described later in this ^LVLGU^S* 

notice, EPA today proposes to change its Regulations to remove. '^^*T$%*t 

the "begun normal operations" 

useful criterion. 

-tact and to 

regul at 

nreplace it with a more 

Both cases involved physical changes to existing 

emissions units, but changes of differing extent, nature and 

result. In Puerto Rican Cement, the owner of a cement plant1 

with several kilns sought to convert one "wet" kiln into a "dry" 

kiln, and to combine that kiln with another kiln. 889 F.2d at 

293. The court observed that the total production capacity of 

the renovated single kiln would exceed the combined production 

capacity of the previous two separate kilns by "about 35%." Id. 

It noted that the renovated single kiln would employ a different 

"cement-making process" than the original kiln from which it was 

"converted," id. And it said that the new kiln would be "more 

efficient [and] may lead the firm to decide to increase the level 

of production." id. at 297 (emphasis in original). In reviewing 

EPA's interpretation of "begun normal operations," the court 

1 Puerto Rican Cement involved a cement plant, not an 

electric utility, but the court's legal analysis of the phrase 

"begun normal operations" in the current regulations is relevant 

to all facilities. 
1 

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applied a highly deferential standard of review, since an 

agency's interpretation of its own regulatory language is 

typically given "'controlling weight unless it is plainly 

erroneous or inconsistent with the regulation.'" 889 F.2d at 

297, quoting Udall v. Tallman. 380 U.S. 1, 16-17 (1965) (citation 

omitted). The court concluded that on the facts of the case, 

EPA's interpretation that "normal operations" had not begun was 

not "arbitrary or irrational," id. at 298, and hence EPA's 

application of the actual-to-potential test to predict fututre 

emissions was permissible. 

In WEPCo. 893 F.2d 901, the Seventh Circuit was faced 

with a different kind of modification. There renovations were 

proposed for several older (35 to 50 year old) coal-fired 

electric utility boilers. The physical changes involved repair 

and replacement of turbine-generators, steam drums and other 

major components. EPA contended, as it had in Puerto Rican 

Cement. that these changes went beyond "normal operations" and 

thus warranted use of future potential emissions as the test for 

an emissions increase over past actual emissions. Here the court 

disagreed with EPA's interpretation that "normal operations" had 

not begun. The court noted that none of the repairs or 

replacements would have "changed or altered the design of the 

facility, " id . a t 908 . -g""- ""^nr i n f p mm Inf.* . un •.nr. Hoc-ign 

^Tira-iri^y wnn'H *-°TMa •»" '"-^angari The court coined the phrase 

'"like-kind replacement" to describe the type of renovation 

occurring at the WEPCo plant. Id. at 917. It said that where 

the renovations were "like-kind replacements," EPA could not 

reasonably interpret its regulations to say that such a unit was 

so different that it had not "begun normal operations." Thus, it 

concluded that the "actual-to-potential" test could not be 

applied, under EPA's regulations, to units simply undergoing 

"like-kind replacements."2 

So-»a__S c/w -TVOAO. iL_u_AJtj_A_ov»v^ > 

Thr-ir twn rlrnicinnB nampri nnr reevi.r-. under its 

current regulation, EPA must consider the facts of each case and 

—-ply the actual-to-potential test only where the change is 

sufficiently significant to support a finding that "normal 

operations" have not "begun." At least for changes that are 

"like kind replacements," "normal operations" have begun, and the 

actual-to-potential test is impermissible. 

Neither) decision*specified the -dividing li 

normal operations. "J The court in HEPCo said 

replacements".^M-^a te 

rej-yulatlons^-^ fall w 

M%e for\"begun 

kind 

2 On remand, EPA employed an actual-to-future actual test, 

comparing WEPCo's representative actual emissions for the 

baseline period to estimated future actual emissions based on all 

the available facts in the record. 
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iJ-

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that " 

Pue 

ronably b 

say tha t 

nor what the 

o clarify this state of affairs, 

the phrase "hegThi normal opera 

uffigionfej 

depart from thi§, 

gate t\J 

could expressly 

o explain what 

The phras 

toot and thus, warrant anj 

as explained J561ow, J_PA 

regulations to apply tht 

moelificafcimis save those 

constitute a replacement 

adoption of this new ru] 

to-actual test to unitsK 

ac tha,_ajfe__e**wU lupli 

dicatorftf of wrieil—^trture 

edictablc. for an aiLual-Lu-arfcua.V 

Ctual-tQ-potential test. ^Consequentlyr 

s today proposing to revise its fl 

actual-to-actual test to all ? ^>-

 or

 <^'*MAt^f 

that are an addition of a new unit or 

of an existing unit.3 Pending final 

, EPA will continue to apply an actualhave "begun normal operations," .ouch 

tmenteaff conctdewi hv tha court in WEPCo. •— 

3 As an illustration, had this new test governed the facts 

in WEPCo or the facts in Puerto Rican Cement (were it an electric 

utility), EPA would have applied the actual-to-actual test.